Valentino Lazaro bagged a late winner for the Austrians as the home side looked to be heading for a hard-fought draw, breaking their hearts at the death.
"We didn't deserve to lose the game, there's no doubt about that," O'Neill said to 'Sky Sports'. "We go behind, it was a soft goal probably if we look at it, but the game was fairly matched in the first half.
"Our reaction to going behind was excellent, I thought we played very well, and I thought up until about 80 minutes, we looked like the team most likely to win the game and then I think we tired a little bit.
"We have a lot of players who aren't playing regular first team football and you saw that possibly in the last five or six minutes.
"They brought on a top player [Marko Arnautovic] and it lifted them. For the goal, it was the last kick of the ball and it was a fantastic finish, but certainly, we didn't deserve it."